Axiom 2014 Annual Report - page 92

Notes to the Financial Statements
for the year ended 30 September 2014
90
Axiom Mining Limited
4. Summary of significant accounting
policies (continued)
The results of subsidiaries are included in the Company’s
statement of profit or loss to the extent of dividends
received and receivable. The Company’s investments
in subsidiaries that are not classified as held for sale
in accordance with HKFRS 5 are stated at cost less any
impairment losses.
Fair value of assets and liabilities
The Company measures some of its assets and liabilities
at fair value on either a recurring or non-recurring basis.
Fair value is the price the Company would receive to sell
an asset or would have to pay to transfer a liability in an
orderly (i.e. unforced) transaction between independent,
knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information is
used to determine fair value. Adjustments to market
values may be made having regard to the characteristics
of the specific asset or liability. The fair values of assets
and liabilities that are not traded in an active market
are determined using one or more valuation techniques.
These valuation techniques maximise, to the extent
possible, the use of observable market data.
To the extent possible, market information is extracted
from either the principal market for the asset or liability
(i.e. the market with the greatest volume and level of
activity for the asset or liability) or, in the absence of
such a market, the most advantageous market available
to the entity at the end of the reporting period (i.e. the
market that maximises the receipts from the sale of the
asset or minimises the payments made to transfer the
liability, after taking into account transaction costs and
transport costs).
For non-financial assets, the fair value measurement
also takes into account a market participant’s ability
to use the asset in its highest and best use or to sell
it to another market participant that would use the
asset in its highest and best use.
The fair value of liabilities and the entity’s own equity
instruments (excluding those related to share-based
payment arrangements) may be valued, where there is
no observable market price in relation to the transfer of
such financial instrument, by reference to observable
market information where such instruments are held
as assets. Where this information is not available,
other valuation techniques are adopted and, where
significant, are detailed in the respective note to the
financial statements.
Property, plant and equipment
Property, plant and equipment are stated in the
statement of financial position at cost or revaluation
less accumulated depreciation and impairment losses.
Revaluations are performed with sufficient regularity to
ensure that the carrying amount of these assets does not
exceed their recoverable amount at balance sheet date.
Changes arising on the revaluation of property, plant
and equipment are generally dealt with in other
comprehensive income and are accumulated separately
in equity in the asset revaluation reserve. The only
exceptions are as follows:
––
when a deficit arises on revaluation, it will be
charged to profit or loss to the extent that it exceeds
the amount held in the reserve in respect of that
same asset immediately prior to the revaluation; and
––
when a surplus arises on revaluation, it will be
credited to profit/loss to the extent that a deficit
in respect of that same asset had previously been
charged to profit/loss.
Gains or losses arising from the retirement or disposal of
an item of property, plant and equipment are determined
as the difference between the net disposal proceeds
and the carrying amount of the item and are recognised
in profit or loss in the period in which they arise. Any
related revaluation surplus is transferred from the
revaluation reserve to accumulated losses.
Depreciation is calculated to write off the cost or
revaluation of items of property, plant and equipment,
less their estimated residual value, if any, using the
straight line method over their estimated useful lives.
The principal annual rates used for this purpose are
as follows:
Leasehold improvements over the lease term
Plant and equipment
20% – 33%
Both the useful life of an asset and its residual value, if
any, are reviewed annually, and adjusted if appropriate,
at the end of each reporting period.
Mineral exploration expenditure
Mineral exploration, evaluation and development
expenditures incurred are capitalised in respect of
each identifiable area of interest. These costs are only
capitalised to the extent that they are expected to be
recovered through the successful development of the
area or where activities in the area have not yet reached
a stage that permits reasonable assessment of the
existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area
are written off in full against profit or loss in the year in
which the decision to abandon the area is made.
COMPANY FINANCIAL REPORT
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